Sensex tanks 337 points on European debt woes

The 30-share barometer of the Bombay Stock Exchange ended its three-day gain and settled lower by 336.62 points, or 1.97 per cent, at 16,781.07 points.

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PTI

Mumbai

June 7, 2010

UPDATED: June 7, 2010 17:57 IST

The BSE benchmark Sensex today tanked 337 points, mirroring sharp decline in world markets that were shaken by fears of widening financial crisis in Europe and fragile economic recovery in the US, besides a rush of public offers at home.

The 30-share barometer of the Bombay Stock Exchange ended its three-day gain and settled lower by 336.62 points, or 1.97 per cent, at 16,781.07 points.

Analysts had on Friday forecast a plunge in the market following the government's decision to make 25 per cent public holding in listed companies mandatory, which would result in a flood of public offers that would lead to stock price correction.

The markets did open down, but on negative global cues and remained weak for the entire session. During the day, the bellwether sank 431 points to hit a low of 16,686.73. 27 of the 30 share barometer index ended in the red.

The wide-based 50-share Nifty Index of the National Stock Exchange too finished 1.98 per cent down at 5,034 points.

"As if concerns over the European debt crisis and weakness in the US was not enough comes another cause of concern that is if Hungary too is reeling," IIFL's Vice President, Research, Amar Ambani said.

Trading was mainly influenced by reports that Hungary too could be staring at a Greece like debt-default situation.

Reliance Industries, which has the maximum weight on the benchmark indices, lost 2.08 per cent to Rs 1,009.35.

Widespread selling was witnessed across sectors, with metal, realty, PSU and oil & gas leading the decline. All the sectoral indices on the BSE ended in red, falling in the range 1-4 per cent. BSE PSU index lost 1.95 per cent on government's mandatory norm for a minimum 25 per cent public holding.

Anil Ambani Group firm Reliance Communications, however, bucked the broader market trend and rose 4.61 per cent after the company's board gave its 'in-principle' approval for a 26 per cent strategic stake sale.

RCom shares have been rising sharply in past few sessions amid stake sale reports. The scrip has gained about 30 per cent since June 1. ACC and Hero Honda were the two other scrips in Sensex which managed to end in green.

"Metals as a space will continue to remain under pressure as long as euro zone issues remain. Also concerns over Chinese demand will continue to affect (sentiment)," said Unicon Financial CEO Gajendra Nagpal.

Correction was also seen in banking counters. ICICI Bank dropped 2.79 per cent, HDFC 2.50 per cent, SBI 2.34 per cent and HDFC Bank 0.40 per cent. .

IT stocks, which were up ahead of crucial economic data in the US on Friday, retreated after jobs data fell to meet the Wall Street expectations. US is the biggest market for Indian software exporters.

Infosys lost 2.14 per cent, TCS 1.61 per cent and Wipro 0.40 per cent.

Realty major DLF tripped on selling pressure and was the biggest loser in the BSE-30. The scrip lost 6.19 per cent.

Investors also dumped PSU shares, following the new norm on public holding after the government made it mandatory for all listed firms to raise public holding to a minimum of 25 per cent.

Today, all the Asian markets closed sharply lower, with Hang Seng & Nikkei falling 2.03 per cent and 3.84 per cent respectively. Shanghai was down by 1.64 per cent. Europe was also trading in the red during mid-session.

Coupled with fresh European turmoil coming from Hungary and four-year lows on the euro, the US markets shed more than 3 per cent on Friday.

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